Tech lifts for­tunes of port city

Com­pa­nies are adopt­ing new ap­proaches to raise ef­fi­ciency

At a spa­cious new plant op­er­ated by Hsoar Group, tech­ni­cians were re­cently in­stalling equip­ment that can pro­duce a cy­cloidal speed re­ducer, a ma­jor com­po­nent of robotic swivel joints.

In two months, the plant in Wen­zhou, Zhe­jiang prov­ince, will start pro­duc­ing parts for ro­bots, as well as com­plete ro­bots, said Huang Zhi, the com­pany’s tech­ni­cal direc­tor.

Hsoar, which was founded in Ruian, a county-level city, in 1993 and spe­cial­izes in auto parts, is hop­ing the ro­bot project will help trans­form the com­pany from be­ing la­bor-in­ten­sive to one driven by high-tech­nol­ogy.

“We be­lieve in­tel­li­gent man­u­fac­tur­ing will be the fu­ture,” Huang said.

The project is an ex­am­ple of how the pri­vate sec­tor in Wen­zhou — the birth­place of the Chi­nese pri­vate econ­omy after the coun­try’s re­form and open­ing-up pol­icy was launched in 1978 — is up­grad­ing to seek new growth driv­ers to main­tain its ad­van­tage.

As 78 per­cent of its area is moun­tain­ous, the port city strug­gled to de­velop agri­cul­ture and large-scale in­dus­tries. How­ever, re­form and open­ing-up pro­vided res­i­dents with op­por­tu­ni­ties to start small busi­nesses.

In the early 1980s, more than 300,000 farm­ers started their own busi­nesses. They cre­ated more than 40 na­tional-level in­dus­trial clus­ters of small busi­nesses that made ev­ery­thing from clothes and shoes to elec­tri­cal com­po­nents.

Boosted by the pri­vate sec­tor, Wen­zhou’s an­nual GDP has in­creased by 412 times in the past four decades, ris­ing to nearly 541.2 bil­lion yuan ($77.88 bil­lion) last year from about 1.3 bil­lion yuan in 1978.

The city has formed five tra­di­tional in­dus­tries in the fields of elec­tronic com­po­nents, shoes, ap­parel, au­to­mo­bile parts and pump valves. Although all five dom­i­nate the do­mes­tic mar­ket, they are at the low end of man­u­fac­tur­ing, which is en­ergy-con­sum­ing and la­bor-in­ten­sive.

Sens­ing a grim fu­ture ahead be­cause of ris­ing la­bor and en­ergy costs, as well as com­pe­ti­tion from other high-end man­u­fac­tur­ers world­wide, en­trepreneurs in Wen­zhou are ex­plor­ing high-tech, in­tel­li­gent man­u­fac­tur­ing so­lu­tions.

Hsoar has in­vested 850 mil­lion yuan in its ro­bot project since 2010 to de­velop speed re­duc­ers. Last year, it suc­ceeded, mak­ing it the fourth com­pany in the world to mas­ter the tech­nol­ogy for mass pro­duc­tion. The out­put value of the project is ex­pected to reach 300 mil­lion yuan in 2019, mak­ing it the com­pany’s ma­jor busi­ness, Huang said.

In ad­di­tion, gar­ment man­u­fac­turer Baox­iniao Group spent two years and 100 mil­lion yuan up­grad­ing its man­u­fac­tur­ing base to a cloud-based op­er­a­tion. In­tel­li­gent pro­duc­tion lines and the in­te­gra­tion of its sup­ply chain, distri­bu­tion and sales ser­vices have short­ened the com­pany’s pro­duc­tion cy­cle from 15 to seven days.

“Now, we can make 200,000 suits a year, dou­ble the stan­dard pro­duc­tion lines,” said Qiu Chengkui, deputy head of the com­pany.

The Wen­zhou gov­ern­ment has sup­ported the high-tech trend. Loans and sub­si­dies are avail­able for pri­vate en­ter­prises’ in­tel­li­gent man­u­fac­tur­ing projects, and project up­grades can get sub­si­dies of at least 8 per­cent of the in­vest­ment amount.

Be­cause most of the city’s small en­ter­prises be­gan as home-based oper­a­tions, the mar­ket is frag­mented, and many still op­er­ate as fam­ily busi­nesses. To tackle this prob­lem, the city gov­ern­ment is build­ing in­dus­trial parks for small-busi­ness op­er­a­tors to of­fer cheaper space, stan­dard fac­tory plants and bet­ter fi­nan­cial ser­vices, help­ing them cut costs and fo­cus more on in­no­va­tion. The city plans to build 142 of these parks by 2020.

To boost the pri­vate sec­tor, the gov­ern­ment has also an­nounced mea­sures to help pri­vate com­pa­nies with up­grades. These in­clude re­duc­ing the costs of land use, elec­tric­ity, lo­gis­tics, fi­nanc­ing and hu­man re­sources.

“With a se­ries of mea­sures, we aim to pro­mote sus­tain­able growth of the non­pub­lic sec­tor and sup­port those en­gaged in it to en­sure the pri­vate sec­tor stays prof­itable,” said Chen Jian­ming, vice-mayor of Wen­zhou.